Financial Literacy is a global challenge and not just unique to Uganda where only 34% of the population has this knowledge. In India, 74% of the population is educated but only 24% knows financial literacy. In China, it is only 28%, Brazil 35%, Russia 38%. In the US, it is quite surprising that 38 households have credit card debt 33% of American adults have saved zero dollars for retirement.
In many education systems, we spend time finding the value of X and studying the Canadian prairies yet miss out on the most important lessons like calculating the time value for money, managing personal finances, budgeting, investment, and planning for old age.
When the world was hit with COVID19, most countries instituted a lockdown to prevent the spread of the Coronavirus. With no access to workplaces, it was quite clear that many families had no emergency funds for food and medical care. Several families have been plunged into debts left behind by those who lost the battle to COVID19. These result from medical bills, and other unpaid debts.
In Uganda where I live, the outcry by many employees, politicians, and other categories of folks took center stage on social media. They demanded the National Social Security Fund (NSSF) pays their savings as survival became difficult.
NSSF collects and safeguards, invests, and distributes retirement funds from employees of the private sector in Uganda. It caters to those who are not covered by the Government Retirement Scheme under the NSSF Act, Cap 222 (Laws of Uganda) to provide social security services to employees in Uganda.
The Fund is a contributory scheme and is funded by contributions made by employees (5%) and employers add (10%) of the employee’s gross monthly wage.
The fact that many people started demanding social security monies a few days after the lockdown. For people who have mastered the art of surviving on budgets and are financially literate, the outcry would come at some point but much later.
In 2020, the opinion pools run by the different media companies on their social media pages had overwhelming responses in support of the profound need to have people receive their savings. One good example is the one that was run by NTV Uganda.
When you look at the responses, it is quite clear that most Ugandans lack financial literacy. If you have failed to survive & set up an emergency fund on your 95% salary, how do you expect the 5% to do the magic?
Many workers have since pushed for midterm access to their savings which the president endorsed. This will only be for eligible National Social Security Fund (NSSF) members aged 45 or who have consistently saved for 10 years. However the majority of workers still have a lot of spending triggers, don’t track their spending, have very set short-term financial goals, and spend their hard-earned cash with no budget.
NSSF money is very little & was primarily intended for retirement age. Many are picking out the word “social security” to justify the urgent need. This was a broad day walk of shame! If you’re a bad planner & big spender you will still “waste” whatever NSSF gives you.
In a survey of over 1,000 workers conducted by the Chartered Institute of Personnel and Development (CIPD) in April 2020, it was found that 39% of those workers had said that their financial security has worsened as a result of the Covid-19 lockdown. By contrast, just 12% had reported an improvement.
While the economic impact of Covid-19 has had a glaring impact on the financial wellbeing of the workforce, the question is whether organizations should train their staff on financial literacy?
I believe they should. This is backed by the Research that the CIPD published in 2017. It was discovered that employees, money worries can result in serious issues like physical fatigue due to lack of sleep; difficulty in keeping a focus at work; spending time dealing with financial problems, both during and outside of the working day; and poor health.
Employers have an important role in improving employees’ financial well-being first of all by paying them fairly and training them on financial literacy. Other parties such as the Government, financial services, and employees themselves can complement the efforts of the employer to make sure that employees can plan to use their earnings to improve their present lifestyles and prepare for descent retirement.
Allan Lakein a well-known Author on personal time management, once said: “Planning is bringing the future into the present so that you can do something about it now”.
The same principle applies to retirement planning and personal financial management. If you want to be happy during your old age, the time is now when you allocate some portion of your earnings and give it to an organized and legally recognized saving scheme. You can also invest in a project that will sustain your life when you retire.
Saving for retirement is not a race but rather a question of behavioral change for anyone wishing to have a better life during old age. It is critical to understand how much you earn at present, and what elements you would like to change in your budget.
Workplaces have to make a deliberate attempt to ensure that they plan for financial literacy training which leads to the possession of the set of skills and knowledge that allows an individual to make informed and effective decisions with all of their financial resources. The financial literacy training mainly focuses on 6 key topics including;
- Personal Financial Management (PFM)
- Loan Management
- Planning for Old Age/Retirement
The lack of knowledge by the population is very dangerous. It is exactly why there is a need by the government through the various agencies like the NSSF itself, URBRA, Banks, and other business associations to take Financial Literacy Training as an Urgent Need for Uganda’s Workplaces and the entire population.
From people familiar with the matter, the biggest percentage of the Ugandan population which is financially illiterate knows less about financial planning, properly managing debt, accurately calculating interest, and the time value of money yet financial literacy is recognized as a critical factor in improving the quality of life as well as improving financial inclusion in Uganda.
How can the training be organized?
Financial literacy training revolves around the core messages which are a set of simple, tried, and tested messages, responding specifically to what someone needs to know to manage his/her finances effectively.
According to the Bank of Uganda, the concept behind the development of the core messages is that hearing the same, or a very similar, message three times will always have more effect than hearing three different messages once.
Employers and other stakeholders are encouraged to make use of the core messages to train transmit financial literacy messages to all employees.
The methodology for the training should be based on a learner-centered approach, capturing how adults learn best. It builds on what adult learners already know which makes the new content relevant to the participants.
There are other simple ways to help you become financially literate.
- Read the Books Both Online and from Book Stores
- Read Magazines & Online Blog Articles
- Use Financial Management Tools
- Listen to Some Money Podcasts
- Take a Financial Literacy Training Course
- Read the Government Resources from The Bank of Uganda
- Focus on Behavior Change to Break the Consumer Mentality
This challenge can also be tackled right from the classroom. It should be a core topic on the curriculum of every country. It is never too late to add financial literacy to the education curriculum. Countries like Canada have already started teaching their citizens right from school. Companies to add the same on their learning and development agenda. It is never too late to learn!
FINANCIAL LITERACY FAQS
What is Financial Literacy?
Financial Literacy means having the knowledge, skills, and confidence to manage money well. One may also say that financial literacy is a process through which an individual (or a family) gains a basic understanding of banking, savings, and the importance of good credit.
How Can I Become Financially Literate?
You can enroll in commercial training on financial literacy. You can also read online articles about financial literacy. There are also several free online courses on financial literacy at edx and Futurelearn all of which are online learning platforms.
What Are the Most Relevant Topics About Financial Literacy?
There are mostly 6 Financial Literacy Topics including; Personal Financial Management (PFM) Personal Financial Management (PFM), Savings, Loan Management, Investment, Insurance, and Retirement Planning (Planning for Old Age).
Financial Literacy Conclusion
Every employee needs to be empowered to have the ability to understand and effectively use various financial skills. These can include personal financial management, budgeting, and investing. Workplaces need to embrace financial literacy because it is the foundation of anyone’s relationship with money, and it is a lifelong journey of learning.
A financially literate professional can manage personal finances efficiently and make appropriate, educated decisions about his or her finances. It is time for you and your organization to empower the whole team to develop better spending habits, learn the value of a savings account, communicate more effectively about finances, and make better financial decisions.
There are also several Finance Books to Read for Financial Literacy which include I Will Teach You to be Rich, by Ramit Sethi, The Millionaire Next Door, by Thomas J. Stanley and William D. Danko, Your Money or Your Life, by Vicki Robin and Joe Dominguez, Liar’s Poker, by Michael Lewis, and others like Rich Dad Poor Dad, The Total Money Makeover, and Broke Millennial.
Learn to Manage Your Money, And Let Everyone Know That “The Single Biggest Difference Between Financial Success, And Financial Failure Is How Well You Manage Your Money. It is Simple: To Master Money, You Must Manage Money” ~T Harv Eker
You can follow some of our useful web resources related to financial literacy topics and training package available;
6 Key Topics to Consider for Financial Literacy Training